Drowning in Debt and Turning to Bankruptcy for Protection

TRI Writer • November 27, 2019

Kenneth C Rannick PC, Kenneth C Rannick bankruptcy, Rannick bankruptcy attorney, Tennessee bankruptcy attorney, Georgia bankruptcy attorney, Tennessee bankruptcy lawyer, Georgia bankruptcy lawyer, declare bankruptcy in Tennessee, declare bankruptcy in GeorgiaAre you drowning in debt? Do you and your family struggle to make your monthly payments? Do you worry about how you will pay for your necessary living expenses? If so, you’ve probably already started to consider bankruptcy. Filing for bankruptcy offers people in severe financial distress relief from the overwhelming burden of debt; a chance to start fresh financially.

Bankruptcy offers many benefits in addition to wiping the slate clean for a fresh start. But it isn’t a free pass; there are serious issues to consider before moving forward with the decision to file.

Will Filing Bankruptcy Help in Your Situation?

Do your due diligence before moving forward to determine if declaring bankruptcy would help in your specific situation. While no one should take bankruptcy lightly, it’s often the best way to move forward and get back on your feet after debt has knocked you down. But how do you know if bankruptcy is the right choice with the best opportunity to relieve your debt?

Bankruptcy is a legal procedure used to discharge debt for consumers who either won’t be able to repay the debt or who do not have the means to repay the debt in their current situation. There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13.

In Chapter 7 bankruptcy, nonexempt assets belonging to the filer are liquidated if there is expected to be enough proceeds to make a material distribution to creditors. The proceeds are distributed towards the debts. Filers must pass the means test before filing Chapter 7 bankruptcy. The means test is in place to make sure that the court isn’t abusing bankruptcy law when granting a discharge of debt.

Chapter 13 bankruptcy is often called the wage earner plan and is for bankruptcy filers with a steady income. In Chapter 13 bankruptcy, filers pay back all or part of their debt through a bankruptcy court-approved payment plan over three to five years.

In most cases, bankruptcy does not protect you from debts incurred after filing. All types of liability are not eligible for bankruptcy. To determine if the majority of your debt is eligible for bankruptcy discharge, discuss it in detail with a bankruptcy attorney.

Is it Worth the Negative Consequences?

Bankruptcy will hurt your credit worthiness if your borrowing opportunities are now high.  It will raise your borrowing opportunities if your credit score is very low.  The bankruptcy remains on your report for ten years if you file Chapter 7 and seven years if you file Chapter 13. When filing Chapter 7 bankruptcy, you may lose assets (depending on the amount of equity involved).

If you are considering filing for bankruptcy and you need to discuss the pros and cons of filing, please don’t hesitate to get in touch. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Our office is the only office in the Chattanooga area with two! You are in good hands with Kenneth C. Rannick P.C.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

January 30, 2024
Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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